Solutions for Clean Air Policy

What to Do in the Wake of the Clean Air Interstate Rule Decision

An air quality chemist for the South Coast Air Quality Management District tests samples to determine pollution levels and the specific components of pollution.

By Robert M. Sussman | August 26, 2008

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This is part three of a three-part series on rebuilding clean air policy after the U.S. Court of Appeals’ Clean Air Interstate Rule decision.

In the wake of the DC Circuit Court of Appeals opinion, a broad-ranging debate is underway among states, environmental groups, industry, Congress, and the Bush administration over how to preserve the Clean Air Interstate Rule’s emission reductions. So far, no single option has emerged which enjoys broad support and a high probability of success.

The most helpful fix would be a court ruling modifying the original decision to preserve the portions of CAIR that the decision struck down. The original panel, or all the judges of the DC Circuit, could reconsider the court’s reasoning and conclusions in response to petitions from EPA and other parties, and decide that the rule substantially complies with the Clean Air Act. Alternatively, the court could leave its decision intact, but rethink whether to vacate the rule. This would leave some or all CAIR requirements in place while EPA goes back to the drawing board. Some of the CAIR litigants are considering a joint approach to the court seeking both forms of relief. It will probably take the court several weeks and perhaps months to review the issues, during which time the CAIR requirements would nominally remain in effect.

But a change in heart by the DC Circuit is a lot to expect. The court’s decision to strike down most of CAIR was unanimous. The court was emphatic in its indictment of the rule’s many shortcomings. It left no doubt that EPA’s approach was seriously deficient and would be difficult to correct. It is thus unlikely that the court would entertain the litigants’ plea to allow the rule to go forward while EPA tries to fix its flaws.

If the court doesn’t change its mind, EPA could still try to rework CAIR to meet the court’s objections, but this would be a lengthy process with no assurance of success. The court disapproved of EPA’s approach of setting a single emission cap for the entire CAIR region, creating emission budgets for individual states, and then letting utilities buy and sell allowances across state lines to meet these budgets. The court said that the Act required EPA to examine each state’s contribution to non-attainment in each downwind state and to impose controls that could be demonstrated to protect the downwind state from out-of-state emissions that could significantly affect its air quality.

EPA would need to greatly augment the analysis it performed for CAIR to satisfy this standard. An acceptable rule might require specific controls for individual power plants that leave little or no room for interstate emission trading among utilities, a feature of CAIR that nearly all parties praised because of its ability to reduce costs of compliance. Moreover, the court’s holding that EPA cannot reduce the value of Title IV sulfur dioxide allowances erects a statutory bar to lower sulfur dioxide emissions, and would limit any new rule to nitrogen oxide emissions only.

With EPA precluded from readopting CAIR in a recognizable form any time soon, the states could try to fill the void. They could, for example, adopt identical emission reduction rules under their state implementation plans that, in combination, would replicate CAIR’s emission cap for the 28-state region. The National Association of Clean Air Agencies is reportedly developing a “model rule” that would guide states in these efforts. EPA could support these efforts by advising the states that power plant controls on nitrogen oxide and sulfur dioxide emissions represent Reasonably Available Control Technology that the act compels states to require.

Downwind states could also petition EPA to control power plants in upwind states under Section 126 of the act. This provision allows states to ask EPA to step in to remedy out-of-state emissions that are worsening their air quality. EPA has taken the position that, with CAIR in place, the emission controls available under Section 126 are unnecessary—a position that North Carolina challenged in the DC Circuit Court of Appeals. With the demise of CAIR, EPA may now be forced to change its mind and impose controls in downwind states when petitioned to do so under Section 126. Nonetheless, a series of state-by-state petitions under Section 126 would be a messy undertaking that could result in a patchwork of confusing and unworkable requirements, inviting further litigation.

Another possibility is that states, along with environmental groups and perhaps EPA, could file suit against utilities for violations of new source review requirements. Previous enforcement actions have been successful in getting power plants to agree to large reductions in nitrogen oxide and sulfur dioxide emissions. Unfortunately, experience has shown that these litigations are very resource-intensive and generally do not yield results for several years. Nonetheless, EPA could better backstop new source review enforcement by explicitly withdrawing proposals to weaken the new source review program that were predicated on CAIR’s ability to control power plant emissions.

If these fixes prove futile, the responsibility will fall on Congress to provide a legislative solution. Completing this task before Congress adjourns for the November election will be challenging. Partisan battle lines are already forming over how the Clean Air Act should be amended. The Bush administration and its congressional allies want to codify CAIR in its entirety, while Senator Thomas Carper (D-DE), Senator Lamar Alexander (R-TN), and others favor a bolder and more comprehensive approach.

The only hope of agreement during the current Congress lies in narrow legislation that would affirm CAIR’s 2009-2010 emission reduction requirements, assuring that power plants remain on track to install pollution control equipment now in the pipeline by these near-term deadlines. This would capture CAIR’s immediate benefits and restart the national air quality program without a lengthy hiatus. Assuming judicial and administrative efforts to salvage CAIR fail over the next few months, the next Congress could then examine the timing and magnitude of a second phase of emission reductions, along with the need for other changes in the act. The new Congress and administration will need to approach this task realistically, since they will have an ambitious energy and climate agenda on their plates that leaves little room for a broad overhaul of the act.

The most pressing priority for Congress should be requiring deeper, faster, and broader reductions in nitrogen oxides and sulfur dioxides by power plants than would have been required under CAIR. As the DC Circuit Court of Appeals found, CAIR’s Phase 2 reductions will come too late to help the many states that are facing attainment deadlines for ozone and/or particulate matter before 2015. Moreover, EPA has now further strengthened its ozone and particulate matter standards—and a new administrator may make them even more stringent to reflect the recommendations of the agency’s scientific advisors. Lowering the current standards to tighter levels will add to the public health importance of timely nitrogen oxide and sulfur dioxide reductions, particularly in states where CAIR emission cuts would have been insufficient for attaining existing standards.

Congress should also require nitrogen oxide and sulfur dioxide reductions on a nationwide basis, providing a safeguard against additional areas falling into non-attainment and mitigating the ecological effects of sulfur and nitrogen deposition across the country. While a national trading program for both pollutants is appropriate, Congress should preserve strong remedies for states suffering air quality degradation from upwind emissions. This will mean preserving and perhaps strengthening the Section 126 petition process in current law.

Congress will be tempted to broaden a Clean Air Act rewrite to address power plant emissions of mercury and carbon dioxide and perhaps perceived shortcomings in the act’s new source review program. Sens. Carper and Hilary Clinton (D-NY) have raised this possibility. Yet expanding the scope of clean air legislation is unnecessary and would increase the potential for controversy and delay.

A more aggressive EPA in a pro-environment administration should have the tools to tackle mercury emissions effectively under existing law. And carbon dioxide emissions from the power sector will almost certainly be covered by comprehensive cap-and-trade legislation to reduce the threat of global warming.

Injecting carbon dioxide into sulfur dioxide and nitrogen oxide legislation will ignite a debate about EPA’s existing Clean Air Act authority over climate change following the Supreme Court’s Massachusetts v. EPA decision. This is a subject that has already drawn fire from all sides with EPA’s publication of an advanced notice of proposed rulemaking reviewing its options under existing law. The need, if any, to alter the Clean Air Act as it applies to global warming is best left to the drafters of a cap-and-trade bill.

The nation’s clean air program provides vital safeguards to public health. Air quality has improved over the last decade, but new science and the tightening of air quality standards have created strong pressure to reduce ozone and particulate matter in the atmosphere to levels that will lower risks of death and serious disease for millions of Americans living in areas with unhealthy air. Our national commitment to clean air faces a serious threat of veering off course in the wake of the CAIR court decision, with progress potentially stalled for years. Congress needs to face this threat with narrow but aggressive legislative fixes that assure timely and deep reductions in nitrogen oxide and sulfur dioxide emissions by our power plant fleet.